Messaging Platforms Like WhatsApp Are Hurting Telco Revenues In Sub Saharan Africa

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GSMA report
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Telcos have several sources of income: Voice, SMS and lately data. Before the start of an era of heavy data usage of by users, telcos heavily relied on the revenue from voice calls and SMS since they formed the bulk of their revenue. Internet access back then could only be accessed by a few on landlines via dial up modems or through WAP on some networks.

Right now we are in an age where Internet access is far from being a privilege for a select few. Telcos have expanded their networks to cover more users where now a huge percentage of users, especially in Kenya, can access the Internet via 3G or even 4G networks.

However, messaging apps like WhatsApp or Facebook Messenger have also expanded their feature set in the last couple of years to include features that are already been offered by telcos like voice calls and sending unlimited messages to other users.

This has led to a declining growth curve which has been experienced by telcos in Sub Saharan Africa as shown by a  report by GSMA. In the report, they revealed that total mobile revenues in this region reached $40 billion in 2016, which was only a partly 3.9% increase compared to the previous year.

One of the reasons for the declining growth in revenue disregarding the fact there is an increase in smartphone adoption is that IP messaging services like WhatsApp, BBM or Facebook Messenger have an impact on revenue growth. Apparently 90% of smartphone users in Nigeria, South Africa and Tanzania use at least one IP messaging service and they are causing an impact on revenue growth.

This is not good since the traditional voice and messaging services offered by these telcos account for more than 70% of revenues for many operators in the region. From a graph shared in the report, the revenues might drop to as low as 2% year-on-year starting next year towards the year 2020.

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